That's pretty clear, but I do want to highlight a few things that the recent sale of the Golden State Warriors tells us and some are bad and some are great.
So, first, the good:
- It's important to note that a team purchased for $119M in 1995 just was sold for $450M in 2010 during a recession. Which means you'd have to lose over $20M a year for 15 years in order to NOT make money over the duration of the this ownership period. That doesn't include the tax savings you get for claiming the loss that happens each year over the 15 years. Golden State has never been one of the best teams in the NBA. This deal did not include a hockey team or an arena. Get where I'm going with this? Yes, this means that as much as we discuss the fact that ASG is cash poor (and they may be) - they are NOT going to lose money at the end of the day. They just are losing money in operating costs NOW.
- So, in a nutshell, as I always say - you don't buy a non-NFL sports team (and even the NFL is getting less and less) in order to make money on an annual basis. You buy it for $200M in order to sell it for $$800M 15 to 20 years later. That should give some context for discussion on why we should be hopeful for getting an owner to buy our team who gets that.
- So, since we know that the money is made on the back end and not annually, this does highlight the biggest issue for our ownership and it's not that we aren't spending money. It's that we aren't spending money WISELY. The main reason teams end up over the luxury tax is that they aren't spending all of their money wisely and yet are willing to spend more money to account for the mistakes being made. So, Rashard Lewis for $111M is a mistake, but going out and getting more pieces to go with him make up for that mistake. And this is done because 1) they want to win a title and 2) they know that they will recoup the money that was ill-conceived in the first place when the owners decide to sell the team.
- This is leads to another bad outcome and that's that - you can't sell a team for $450M and make the player's union believe that the league is hemorrhaging money. The player contracts and the value of the teams are not in sync with - we're too poor to sustain this model. So, if I'm a player, we're going to have to have a work stoppage (Note: this presumes that as a player I've saved my money well and am able to live for a year or two without a paycheck vs. owners who don't even eat off of the money made or lost by their teams. Since we know that too many players are NOT that financially savvy, the owners still have a bargaining chip that is easy to chomp on.) Anyway, if the players are smart, they won't allow owners to simply scream about operating expenses. That's NOT how owners make their money. If they want to scream about expenses, then you can't go over your own salary cap and pass out bad contracts at the same time. Either eat the contracts, spend more, and shut up about poverty or don't eat the contracts and allow your team to get worse before it gets better.